Microsoft and OpenAI are reportedly probing whether data from the AI firm’s technology was improperly accessed by a group linked to Chinese artificial intelligence startup DeepSeek. According to Bloomberg’s Jan. 29 report, Microsoft security researchers flagged unusual large-scale data extraction from OpenAI’s API in late 2024, sparking concerns over potential policy violations or unauthorized data collection.
As OpenAI’s biggest investor, Microsoft swiftly alerted the company about the suspicious activity, raising alarms that the group may have bypassed restrictions to access vast amounts of proprietary data. If confirmed, this breach could represent a serious challenge to OpenAI’s terms of service, heightening fears about AI model security and intellectual property theft.
The controversy comes shortly after DeepSeek introduced its latest AI model, R-1, on Jan. 20. The model reportedly rivals OpenAI’s ChatGPT in performance while maintaining significantly lower development costs. The release sent shockwaves through the tech and AI sectors, triggering a sharp decline in US-based AI stocks and wiping billions off the market.
Adding to the growing scrutiny, White House AI and crypto czar David Sacks told Fox News on Jan. 28 that DeepSeek may have used a technique called distillation to train its AI. This method involves leveraging the outputs of another AI model to enhance its own capabilities, potentially infringing upon OpenAI’s proprietary technology. While OpenAI acknowledged broader concerns about Chinese firms attempting to distill US AI models, it did not directly address DeepSeek in its response.
AI Czar David Sacks says American companies will learn efficiency techniques from China's DeepSeek AI model, but big AI data centers are still needed and scaling the biggest data centers is still an advantage pic.twitter.com/SuSlhGKO3J
— Tsarathustra (@tsarnick) January 28, 2025
“We know PRC-based companies — and others — are constantly trying to distill the models of leading US AI companies,” an OpenAI spokesperson told Bloomberg, referring to the People’s Republic of China.
Also Read: ChatGPT Down: Major Outage Hits OpenAI Amid Operator Launch Hype
The US government is also taking action. CNBC reported on Jan. 28 that the US Navy issued a ban on DeepSeek’s AI model, warning personnel via email on Jan. 24 not to use it due to “potential security and ethical concerns.” This latest development underscores the intensifying rivalry between the US and China in the AI race, as national security concerns take center stage.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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